A prospective tenant, who is a close friend of a previous tenant, is interested in renting the unit. Their income is less than twice the rental amount, but they have offered to pay a full year. They also state that they gave a substantial amount in savings. Should I approve them, if credit and background check are good?
Nope. Unless they are VERY low income more than 20% goes to taxes. That means they’re going to live on 30% of what they make? That’s good, insurance, gas, utilities, etc etc etc. Some people have trouble making rent when they pay 33% rent and 20% taxes and try to live on 47%.
Check with your local and state laws (hopefully you already have) many limit how many months a tenant can prepay rent. Also, unless this is your only rental you can’t go changing application requirements Willy Nilly without violating fair housing laws. You should have written requirements that say 3x or 2x. And don’t turn down anyone else at 2x and then accept this person.
Don’t forget, you haven’t earned any of that prepaid rent. If they start throwing parties, smoking in the unit, bring in a pet, start listing it on Airbnb or subletting the unit. You can’t evict them without returning their prepaid rent. This has bad idea written all over.
No, no, no. Paying in advance is not a good thing IMO. They don't make nearly enough to afford your unit, period. They need to find another place and you need to find another tenant. There are LOTS out there...why settle for a very probable problem? One bad month or emergency (medical/ car/etc) and you are screwed.....